Stearin stocks accumulate after CPO export ban

JAKARTA (JP): Stearin stocks have been accumulating in the storage tanks of palm oil refining companies since a complete ban on the exports of crude palm oil (CPO) and all its derivatives began January.

Data released by the internal trade directorate general here showed that the Bukit Kapur Reksa Group in North Sumatra held the largest stock of 45,950 tons of stearin as of the end of last month.

Total stearin stocks reported by the 17 major producers to the directorate general as of last month amounted to 106,540 tons.

Since domestic demand for stearin is very small, CPO companies have been forced to hold their stearin, usually exported, in their storage tanks pending the lifting of the blanket export ban early next month.

Stearin is a byproduct of the refining of CPO. According to industry analysts, the refining of one ton of CPO into olein produces 230 kilograms of stearin.

The other major producers of stearin last month included the Musim Mas Group with 22,300 tons, Hasil Karsa Group with 11,546 tons and Gapki with 6,073 tons.

Industry analysts here wonder how the Bukit Kapur Reksa Group could have piled up such large a stock of stearin because its stearin output, as reported to the directorate general, was only 5,189 tons for January.

The domestic trade directorate general explained in a press release that the stearin stocks reported as of last month by the 17 producers were a cumulative total, including those carried over from the previous months.

Yet, analysts believe Bukit Kapur Reksa's reported stearin stock was exaggerated as this would mean the group had produced about 150,000 tons of olein last month alone.

An executive of the Cooking Oil Producers Association commented that even though the stock totals were cumulative, that volume was still questionable.

"Where have they sent so much olein? Moreover, CPO mills usually export most of their stearin as soon possible to reduce inventory costs and the ban on stearin export was enforced only last month," the executive said.

The 17 CPO producers also reported holding 66,980 tons of palm kernel oil last month due to the impact of the blanket export ban on CPO and all its derivatives. (vin)